Charterers Hold Back Cargo to Drag Down Capesize Rates

SINGAPORE, Dec 1 (Reuters) – Freight rates for large capesize dry cargo ships on key Asian routes could drop next week as charterers hold back cargo although higher prices of fuel and iron ore may support current rates, brokers said.

“It seems to be a war of attrition – a waiting game – between owners and charterers,” said a Singapore-based capesize broker. “Owners are trying to be brave in holding rates up, but charterers are watching and waiting (for rates to fall).”

“Next week is probably the last hurrah for a pre-Christmas rally. I give it until Dec. 14 before it collapses because then people start to go on holiday,” the broker added.

Charter rates are still higher than a year ago at around $6.25 per tonne from Australia to China and $13 from Brazil to China, the broker said. That compared with about $4.75 per tonne on the Australia route and $9.80 per tonne from Brazil on Dec. 1, 2015.

Vessel operators, keen to recharter vessels hired earlier, mainly drove chartering activity this week although major miners such as Vale and Fortescue Metals Group were offering cargoes on Thursday.

“Vale said if there are vessels available for loading in mid-December then it can try to charter those ships, but otherwise it is not actively looking,” said a Shanghai-based capesize ship broker.

Rates for coal cargoes from eastern Australia were unchanged from a week ago at around $8.50 per tonne, the broker said.

Charter rates for iron ore cargoes from Western Australia-China fell to $6.26 per tonne on Wednesday from $6.93 a week ago.

Freight rates from Brazil to China climbed to $13.01 per tonne from $12.87 during the same period.

Charter rates for smaller panamax vessels for a north Pacific round-trip voyage surged to $8,594 per day on Wednesday, the highest since December 2014, from $8,460 last week.

Freight rates in the Far East for smaller supramax vessels held steady on positive sentiment with owners achieving around $7,000 per day for Indonesian coal cargoes to China, brokers said.

The Baltic Exchange’s main sea freight index fell to 1,204 on Wednesday from 1,224 last week. (Reporting by Keith Wallis; Editing by Manolo Serapio Jr.)